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6 Things You Need To Do If You Want To Retire Early

6 Things You Need To Do If You Want To Retire Early

Most people think about retirement in some sense. You may be one of the “average” people looking for retirement at 65, or you may be someone who is aiming to retire early.

Early retirement may not be for everyone: it usually means that you have to go to some form of extreme in order to reach it. You may have to work long hours, cut your expenses a good amount, or even both. However, I’ve never heard a complaint from those who retire early.

Also, there are many websites that talk a lot about early retirement that you may want to read if you are serious about having this goal. My favorites include Mr. Money Mustache, Retire By 40Create My Independence and Johnny Moneyseed.

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1. Determine how you will live during early retirement.

You need to really think about how you want to spend your retirement in order to determine how you will reach early retirement. Will you be traveling the world? Will you move to a cheaper foreign country? Will you have children? Will you have grandchildren? How will you pay for anything medical that arises?

2. Figure out how much you will realistically spend in retirement.

For some reason, most think that they will spend less when they are in retirement. However, that is not always the case. You will have more free time and therefore will have more time to possibly spend money. Also, you will have to start paying for your own health insurance if it is currently being covered by your employer. The cost of this may shock you if you are not used to it.

3. Figure out how much you need to save in order to retire early.

Of course, the big factor of whether or not you can retire early is whether you actually have enough retirement funds. You need to figure out exactly how much you need to retire and how you can stretch that amount for decades to come. For example, if you want to retire in 10 years at the age of 35, you need to figure out exactly how much you need to survive in order to stretch your retirement funds for almost another 50 or 60 years.

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4. Start making as much money as you can.

One way to reach early retirement is to make as much money as you realistically can. Definitely do not engage in anything illegal, but try to get as many promotions and pay raises as you can. Work hard and know what your next step to reach that next pay level is.

This is where certain people aren’t interested in early retirement. Do you want a lifelong job that you love? Or do you want a job that will allow you to retire early? Usually it will be hard to have both.

There are many fields that you may be interested in to make more money. You can go into engineering, sales, certain financial sector jobs and more. Or you could work a day job and earn extra income on the side as well.

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5. Look for passive income.

If your goal is early retirement and you no longer want to work, you may want to look into making monthly income through passive sources. This way you are still bringing in money each month, but all that is required from you is occasional maintenance.

Ideas for passive income include rental properties, investing in dividend-paying stocks, and more.

6. Cut your expenses.

If you want to reach retirement as soon as possible, then you may want to make as much as you can, and also cut your expenses as much as you can. Doing both at the same time can drastically increase your savings rate.

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Look for any expenses that you can cut out of your budget. I am a firm believer of enjoying your money but also saving it. So, cutting your expenses does not mean that you need to cut everything out in your life that you enjoy. It means that you need to find a healthy medium.

There are many ways for you to get a better value for your money: ask for discounts, use coupons, buy quality items, and so on. Do you really need a 5,000 square foot home? Analyze anything and everything in your life. I’m sure there is something that you can cut out of your budget.

Do you want to retire early? Why, or why not?

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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